Voetstoots for beginners

A voetstoots clause in an agreement of sale protects the seller against failure to obtain statutory approval for building alterations on the property which render the property unfit for its purpose.

A voetstoots sale of land means that the land is sold "as it stands". Voetstoots literally means sold ‘with a shove of the foot'. In general, a voetstoots clause is designed to protect a seller of property from liability for damages arising from hidden, unknown defects in the property. This legal principle therefore does not apply in the circumstances where a seller is aware of the existence of such latent defects and, in bad faith and with the intention to defraud, deliberately conceals the defects from a purchaser.

In September 2008, the Supreme Court of Appeal in Odendaal v Ferraris confirmed that non-compliance with statutory building regulations constitutes a latent defect that is covered by a voetstoots clause in an agreement of sale.

In a sale of residential property, a buyer is entitled to assume that the building was erected in compliance with all statutory requirements and that it may be used to its full extent. This assumption was said by the court to be "so obvious that it is implied as a matter of law in any agreement relating to the sale of property". It is an implied or tacit term of such an agreement that alterations to a building made by the seller comply with the necessary statutory requirements. However, the absence of statutory approval for building alterations does not necessarily render the property unfit for the purpose for which it was purchased.

The court referred to a 1980 Johannesburg High Court sale of business decision of Ornelas vs Andrew's Café and another. In Ornelas, a property was sold as a going concern for the purpose of conducting a café and restaurant business. The business was, however, conducted without a licence and the purchaser was unable to obtain one to operate the business. The purchaser, therefore, could not use the property for the express purpose for which it had been bought. The voetstoots clause therefore did not exempt the seller from the obligations to deliver a business that included a restaurant that could be lawfully operated because the seller was obviously aware of the defect.

In the recent Odendaal case, the Supreme Court of Appeal agreed with the concept that a seller's non-compliance with statutory building regulations constitutes a latent defect. But the purchaser had failed to prove that the seller deliberately concealed the information. The Court endorsed the relevant legal principle that in order to avoid the consequences of a voetstoots sale, the purchaser must show not only that the seller knew of the latent defect and did not disclose it, but also deliberately concealed evidence of the defect with the intention to defraud the purchaser.

Prospective purchasers should properly inspect immovable property they intend to purchase and the related municipal records. Appointing an expert may even prove to be a very small price to pay to extinguish looming risks, particularly given the increased costs of immovable property and in construction today. Alternatively, purchasers should insist on a term in the agreement that, despite the voetstoots clause, the building has all required statutory approval.

Lester Timothy is an associate with law firm Deneys Reitz Inc.

Article by: www.sapropertyinvestor.co.za